Anti-hawking provisions for super, insurance passes both houses
A bill containing reforms to bolster consumer protections by strengthening the unsolicited selling provisions and prevent pressure selling to consumers has been passed by both houses of Parliament.
The Financial Sector Reform (Hayne Royal Commission Response) Bill 2020, passed on Thursday, addresses 20 recommendations from the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Schedule 5 of the bill amends the Corporations Act to ban the hawking of financial products. In particular, the amendments strengthen the existing prohibitions on offers of financial products, securities and interests in managed investment schemes during the course of, or because of, unsolicited contact with a consumer.
Schedule 7 to the bill gives effect to recommendation 4.8 of the financial services royal commission to make claims handling and settling a financial service under the Corporations Act.
The bill also amends the SIS Act to impose a new condition on licences held by a body corporate trustee of a registrable superannuation entity.
“The new licence condition prohibits these trustees from having a duty to act in the interests of another person, subject to exceptions that enable trustees to carry out their ordinary functions as a trustee of a registrable superannuation entity,” the explanatory materials stated.
The bill also makes adjustments to the SIS Act relating to the roles and responsibilities of superannuation industry regulators.
Specifically, it extends ASIC’s role in superannuation regulation to cover consumer protection and market integrity regulation.
It also extends the Australian financial services licensing regime under the Corporations Act and the consumer protection provisions under the ASIC Act to cover a broader range of activities undertaken by APRA-regulated superannuation trustees.
“Consistent with the objective of recommendation 6.3 of the financial services royal commission, this is designed to more effectively make ASIC the superannuation regulator responsible for promoting consumer protection and market integrity,” the EM explained.
Treasurer Josh Frydenberg said the bill will also make the handling and settlement of insurance claims a “financial service”, which will require insurers to behave honestly, efficiently and fairly and comply with other licensing obligations, to improve claims handling practices.
Mr Frydenberg said the changes provide “further clarity regarding the role of regulators, [and enhance] the requirements of financial institutions reporting breaches of the law which will ensure significant misconduct is reported and investigated sooner”.
